Kumho expects butadiene, SR prices to continue rising

SEOUL, South Korea—Kumho Petrochemical has reported an upward trend in the prices of butadiene and synthetic rubber in the first half of 2018.

The “gradual” increase in butadiene prices, the company said in a Aug. 6 release, was a result of a decline in supply, due to “regular maintenances, troubles and increased demand caused by favorable ABS market.”

The comments seem to be in line with recent market reports suggesting that several Asian-based SR producers are running plants at reduced capacity due to weak market conditions.

Citing figures from different market analysts, Kumho said butadiene prices grew from $1,298 per metric ton in January to $1,710 per ton in June in Asia.

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Similarly, prices increased from $964 per ton to $1,513 per ton in Europe, and from $898 per ton to $1,658 in the U.S. during the six-month period.

Likewise, Kumho noted, synthetic rubber price hikes are due in part to the increase in butadiene prices.

According to figures published by the Korean supplier, SBR prices rose from $1,541 per ton in January to $1,733 per ton in June. BR prices also rose from $1,738 per ton to $2,030 per ton within the six months.

Kumho expects butadiene supply to remain tight in the third quarter of 2018, due to “trouble and regular maintenance in the short term.”

The company said it expected the butadiene pricing market to be volatile in the third quarter, depending on downstream demand for peak season of manufacturing industry.

As for synthetic rubber, Kumho expects “weak” prices due to delay in demand recovery for tire makers.

“Synthetic rubber producers will reduce operating rates due to low profitability and a wait-and-see attitude in the market will be continued,” the company predicted.

In the three months to end of June, Kumho Petrochemical posted an 8.9 percent quarter-on-quarter increase in synthetic rubber sales, at $460 million, corresponding to 35 percent of the company’s total sales. Profitability of the SR business also grew as a result of strong butadiene prices, said Kumho.